DOJ Settles with Big Tech Companies over Hiring Practices

By Jason Beahm on September 27, 2010 6:09 AM

The U.S. Department of Justice has tentatively reached a settlement with Adobe, Apple, Google, Intel, Intuit, and Disney's Pixar unit. The big tech companies have agreed not have their employees enter into no solicitation agreements. The settlement will significantly open up competition to attract top talent.

According to lawsuits filed by the Department of Justice's Antitrust Division, the six companies entered into anti-competitive agreements with regard to their hiring practices in order to restrain competition for top employees. "The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process," said Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice's Antitrust Division. "The proposed settlement resolves the department's antitrust concerns with regard to these no solicitation agreements."

The Department of Justice said that the six companies entered into the anti-competitive agreements because of a strong demand for employees with advanced or specialized skills. Companies do not want to lose such employees because they are valueable, and new employees are expensive to find and retain. However, according to the complaint, the companies' senior executives created hiring systems designed to avoid contacting each other's employees.

Under the settlement, if accepted by the court, the companies will be prohibited from using anticompetitive practices or using no solicitation agreements. In addition, the settlement prohibits the companies from entering in to, maintaining or enforcing any agreement that prevents soliciting, cold calling, recruiting, or otherwise competing for employees.

This looks to be beneficial to employees in the end as they were previously being essentially locked into their companies and blocked from the rest of their industry without the ability to move to a competitor. According to the Department of Justice, in the past the six companies "eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities."